A shift towards “profit-driving” marketing

By Hayley Spence | 14 October, 2015

As the customer’s path to purchase (and I use the word path loosely), grows even more complex and competitive, advertisers are having to re-think how they choose to invest each marketing dollar. There has been a growing trend in thinking towards what Google has coined the “profit-driving marketing” movement. It means approaching marketing as a profit centre instead of a cost centre.

I like to think of as simply going fishing when and where there are fish around. Sounds pretty simple and logical right? Well it isn’t a strategy deployed by many.

One of the key principles of profit-driven marketing is a respect for the 24/7 nature of the constantly connected consumer who expect brands to be there when they need them. This means profit-driven marketers match their media spend to fluctuating demand – particularly paid social, digital display and search spend. Too often we have big channel plans signed off at the start of the year with no flexibility. I know that some things need to be locked in so as to get the best deal and so forth. I also understand that it isn’t a reality for most to have an entirely fluid budget allocation – not least because of resource. With that said, every brand should put aside a percentage of their budget into a war chest of sorts. There needs to be some way to take advantage of opportunity when it arises.

Search volumes and social listening tools are great ways to understand fluctuations and trends in demand which aren’t always seasonal and predictable. Resolution have created an alert tool for a leading medical brand that shows peaks in symptom searches around Australia in real-time. The results are incredible and not at all predictable for what is considered a highly seasonal category. The insights have not only changed the search and social strategy, but more interestingly, the in-store distribution and display strategy. The brand now goes fishing when and where there are fish.

Never fear…

Deploying this strategy doesn’t mean having endless sums of money to play with. It is more a shift in thinking in terms of how to play with it. During my time at Resolution UK, I was fortunate to work on a very progressive airline client that believed in the profit driving marketing model after we proved the concept through various tests. We found they were better off not spending as much in the peak travel booking season as one may think as it was a cluttered search environment and people would naturally find them as part of the consideration set. We instead tended to spend a lot more than others in the shoulder periods when the brand managed to get a much lower CPC and higher conversion rate. People were always fishing (searching) but not every fisherman was ready with their rod as they had exhausted their budgets at the same time as everyone else. Every budget decision made for Paid Search came back to real-time business needs and opportunity. For this reason and many others, they are still one of a handful of airlines in Europe to make a profit each year.

The questions is, why we don’t do this more often in Australia? It doesn’t just work for e-commerce brands who can see an immediate return. I have seen it work for automotive, FMCG, Fast Food chains and Telecoms just as well.

If you’re relying on a predetermined schedule for your paid channel budgets which are locked in and capped, your brand is almost certainly missing out on opportunity. We need to start thinking differently as we head into the 2016 planning period. Have you got your war chest ready? Are you ready to fish at any given moment?